Correlation Between Jahwa Electron and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both Jahwa Electron and Dongnam Chemical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jahwa Electron and Dongnam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jahwa Electron and Dongnam Chemical Co, you can compare the effects of market volatilities on Jahwa Electron and Dongnam Chemical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jahwa Electron with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jahwa Electron and Dongnam Chemical.
Diversification Opportunities for Jahwa Electron and Dongnam Chemical
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jahwa and Dongnam is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Jahwa Electron and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical and Jahwa Electron is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jahwa Electron are associated (or correlated) with Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of Jahwa Electron i.e., Jahwa Electron and Dongnam Chemical go up and down completely randomly.
Pair Corralation between Jahwa Electron and Dongnam Chemical
Assuming the 90 days trading horizon Jahwa Electron is expected to generate 2.45 times more return on investment than Dongnam Chemical. However, Jahwa Electron is 2.45 times more volatile than Dongnam Chemical Co. It trades about -0.03 of its potential returns per unit of risk. Dongnam Chemical Co is currently generating about -0.09 per unit of risk. If you would invest 2,250,000 in Jahwa Electron on September 2, 2024 and sell it today you would lose (1,019,000) from holding Jahwa Electron or give up 45.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jahwa Electron vs. Dongnam Chemical Co
Performance |
| Timeline |
| Jahwa Electron |
| Dongnam Chemical |
Jahwa Electron and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jahwa Electron and Dongnam Chemical
The main advantage of trading using opposite Jahwa Electron and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jahwa Electron position performs unexpectedly, Dongnam Chemical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| Jahwa Electron vs. Handok Clean Tech | Jahwa Electron vs. DSC Investment | Jahwa Electron vs. Golden Bridge Investment | Jahwa Electron vs. SV Investment |
| Dongnam Chemical vs. AptaBio Therapeutics | Dongnam Chemical vs. Daewoo SBI SPAC | Dongnam Chemical vs. Dream Security co | Dongnam Chemical vs. Microfriend |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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